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FINRA Seeks to Pay All Disciplinary Hearing Panel Members

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The Financial Industry Regulatory Authority wants to compensate all disciplinary hearing panelists.

FINRA filed a plan with the Securities and Exchange Commission Thursday to amend Rule 9231 to provide for the compensation of all panelists that serve in connection with a FINRA disciplinary hearing, regardless of whether it is an extended or non-extended hearing.

FINRA has filed the proposed rule change for immediate effectiveness.

Rule 9231 governs the appointment by FINRA’s chief hearing officer of hearing panels, both extended and non-extended, and replacement hearing officers.

A hearing panel consists of a hearing officer and two panelists.

Each panelist must be associated with a FINRA member or retired therefrom. Service as a panelist is voluntary.

Rule 9231 authorizes the chief hearing officer to exercise discretion to compensate panelists who serve on extended hearing panels only.

The proposed rule change would amend Rule 9231 to provide for the compensation of all Panelists, irrespective of whether they serve on extended or non-extended hearing panels, and without the exercise of discretion by the chief hearing officer.

“FINRA believes the proposed rule change will encourage a greater and more diverse pool of eligible individuals to agree to serve on Hearing Panels,” the regulator explained. “A larger and more diverse pool of eligible individuals willing to serve as Panelists will facilitate the Chief Hearing Officer’s ability readily to appoint Hearing Panels with appropriate experience and expertise as needed.”

In addition to traveling to hearing locations and attending hearings, panelists are expected to review materials in preparation for the hearing, participate in conference calls with the hearing officer, review post-hearing briefs, participate in deliberations (which may require a full day or several days of shorter sessions), and review and comment on a draft hearing panel decision, FINRA states.

Hearing panel decisions generally may be appealed to, and are subject to discretionary review by, the National Adjudicatory Council.

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